The leading altcoin Ethereum has risen over 40% in the past week, driven by a resurgence of optimism in the crypto industry. At the time of publication, the token confidently holds above the psychological mark of $2,500.
However, this rally may be losing momentum, especially considering that US investors seem to be taking profits. What implications will this have for ETH's price dynamics in the short term?
The rise in ETH price is under threat due to the exit of investors from the US
According to CryptoQuant, the Coinbase premium index for ETH peaked at 0.022 on May 10 and has been declining since then. At the time of writing, this figure stands at 0.0063. This metric has recorded a decline despite a 5% increase in ETH price over the same period. This indicates increasing selling pressure from US investors, which could significantly impact the altcoin's price.
The ETH premium index on Coinbase measures the difference between the token prices on Coinbase and Binance. It is a good indicator for tracking the sentiments of US investors.
When the premium index rises, it means that ETH is trading at a premium on Coinbase compared to international exchanges, reflecting stronger buying pressure from institutional and retail investors in the US.
Conversely, when the premium index falls or, worse, turns negative, it signals that demand on Coinbase is lagging behind global markets due to profit-taking or decreased interest among American buyers. A decline in the ETH premium index amid rising prices indicates that American investors are exiting positions and taking profits, rather than buying during the rally.
Moreover, the divergence indicator of ETH price with the number of active addresses (DAA), an on-chain metric that compares price movements with network activity, supports this bearish forecast. According to Santiment, the indicator has been negative for the past few days, even as the ETH price rises. At the time of writing, it stands at -58.2%. This negative value indicates that the recent rise in ETH price is not supported by a corresponding increase in user engagement. Essentially, insufficient demand fuels the ETH rally, hence there is a risk of a pullback in the short term.
Will the 'bulls' be able to reclaim $2,745, or is a deeper decline expected?
ETH is trading at $2,598 at the time of publication, slightly below the multi-month resistance formed at $2,725. As US investors take profits, the downward pressure on ETH intensifies and could lower its price to $2,424.
If the bulls cannot defend this level, the token price may drop further to $2,243. However, if bullish pressure intensifies, ETH may attempt to rise again to $2,745.#BinanceSquare #Write2Earn #BinanceAlphaAlert #TradeStories #ETH $ETH